Lake Elmo awards bid for $2 million Lake Elmo Avenue water main

Water will start to flow under Lake Elmo Avenue from 30th Street South to the future Fifth Street when work begins on the $2 million Lake Elmo Avenue Trunk water main improvement project.

During the June 3 city council meeting, GM Contracting Inc. was awarded the project with a bid of $2,015,687.39, far under the expected cost of $2,175,000. The vote, 4-1, was not without lively discussion as Councilmember Anne Smith raised concerns on the time schedule and cost of the project.

“Earlier in this meeting, we had our agreement with the Met Council terminated,” Smith said. “I’m confused why we are going forward with this project now when I do not believe it is in the right sequence.”

“The Met Council terminated their agreement with us with the understanding that we would continue to invest in our infrastructure,” Mayor Mike Pearson said. “This project is just a part of the city’s infrastructure. There are interested parties that are asking for water.”

Pearson said he also believes that the bid for the project is good, and wonders what a delay would cost if the project were pushed off a few years.

“I feel like the residents of Lake Elmo should know that this project needs to be self-funded, and does not fall on the taxpayers,” Smith said. “The city already has seven projects, and another waterline coming down another road next year.”

Smith was referring to the Inwood Avenue Water Improvement project that will provide water access to the west sections of town, and was recently funded by a state bond of $3.5 million dollars. That project is expected to be worked on in 2015.

Smith also raised concerns that because there were changes to the Met Council growth numbers in its Thrive 2040 projections, the comprehensive plan will also change and leave inaccuracies in the expected population estimates.

“You have to look at the water system holistically,” City Planner Kyle Klatt said. “You can make adjustments and tweaks to the comprehensive plan, but this plan has been worked on for 10 years.”

“These lines create a loop around the city, and this is only a part of it,” City Engineer Jack Griffin said. “As development occurs, the ultimate plan will be to connect the lines and have water service go both ways.”

In support of the project was Dan Regan of Launch Properties. He is planning to put in 400,000 square feet of warehouse space in a development that would be positively affected by the Lake Elmo Avenue water main.

“Our family has owned this land for decades,” Regan said. “I’m not coming to you as a stranger. For development to occur, we need that infrastructure.”

Because of the high volume of water needed for the fire suppression system in the warehouse, a well would not be able to provide enough water.

“Our development is based on this decision,” Regan said. “You will change the perception of Lake Elmo with this investment. You can’t see that return on investment without making that first investment.”

Smith said she was concerned that instead of attracting businesses the city wants, they may be forced to take businesses in desperation.

“I had a vision, Dan, that your land could be something spectacular like a Cancer Centers of America with hotels and restaurants, and not what you are currently building,” Smith said. “You look at Wayzata or Minnetonka and they have P.F. Chang’s, and The Melting Pot coming in. We should be able to get a P.F. Chang’s. We should be able to be a player in the Metro.”

“The jobs we are creating will be good, head-of-household jobs,” Regan said. “What we are building is a permitted use in the zoning ordinance. There is not a demand for a hotel right now.”

The council had approved the plans and specifications for the Lake Elmo Avenue project during its April 15 meeting. At that time, the council directed staff to advertise for bids from contractors to complete the project in November 2014. At that time the council voted 3-2 to advertise for bids on the project, as concerns were raised about the Water Assessment Fund’s ability to handle the bond payments in the future.

“A lot has changed in a month,” City Administrato Dean Zuleger said. “It’s a game-changer.”

During the April 15 meeting, Councilmember Justin Bloyer had concerns about the unfinished policy for how the city planned to assess the lateral benefit charges to residents along the line. The policy was finished on May 6 to allow residents who do not plan to hook up to the municipal water system to be assessed half of the fee, $2,900, at the time of the project, and the other half if the property plans on joining the system.

Also during the April 15 meeting, Councilmember Wally Nelson had concerns about the cash flow of the Water Assessment Fund.

According to city Finance Director Cathy Bendel, projections for the next 20 years show the Lake Elmo Avenue project will fall short of being able to fund itself, but as a whole the water system will have a cash flow of more than $7 million.

With just the amount of committed cash flow in the water service fund, the city would be able to fund the bond payments for the next 12 years, Zuleger said. Additional sources of funds to the cash flow would be WAC fees from addition growth along the Lake Elmo Avenue water main, WAC fees from the Inwood Avenue water main that won’t be funded by city-sold bonds, and additions to new hookups along the established lines.

“With the commitments we have now, I can see us looking at lowering the water rates in a few years,” Nelson said. “If you look at the cash flow for the loop, this is going to benefit the whole system.”

“In the 15 years that I have done this, I have never seen (this many committed prepaid WAC fees) before,” Zuleger said.

The project will bring municipal water service from the Old Village to the south and east sections of the city.

“GM Contracting has done projects in Lake Elmo in the past, and has done a good job with them,” Griffin said.